Business: The Decision Matrix: a Tool To Make Smarter Decisions (And Avoid Bad Ones)
“How much money would you have in your bank account if you could reverse the three dumbest financial decisions of your life?”
My heart sank as I started doing the math.
“Now think about what was going through your mind to come up with those decisions.”
Ah fuck…I’m an idiot.
I came to this moment of truth while attending a workshop several years ago while the instructor was making a point about the importance of good decision making.
The quality of your life is determined by the quality of your decisions.
What most people don’t realize is that decision making is a skill that you can improve.
So in the past few years, I’ve spent a lot of effort on improving my ability to make decisions.
That lead to me learning more about my own cognitive biases and seeking out various decision-making tools.
Decision making comes in all shapes and sizes.
One situation I find myself coming across a lot is when I have to choose the best out of several alternatives.
It’s overwhelming, especially when they’re all strong in their own ways.
And I’ve been in situations where I can’t make a decision so I procrastinate. Or as soon as I make a decision, I start regretting it.
Have you ever felt this way?
This lead me to discover the power of a decision matrix (also known as an option matrix tool).
Since discovering it, I’ve been able to make stronger decisions more quickly. But better still, I’ve been making them ways that don’t lead to any remorse.
I’ve used a decision matrix to:
- Choose the right Brazilian Jiu-Jitsu school when I moved to Atlanta
- Choose which cities to live in
- Choose which affiliate campaigns to run
- Decide which business projects to pursue
- Finalize which employee to hire out of a pool of great candidates
I even taught someone about decision matrices to help them decide which friends should be her bridesmaids. (Hint: you definitely don’t want bridesmaids who have horrible organization skills or are always late!)
The possibilities are endless.
You’re going to come across situations in the future where you’re going to have to make some tough choices.
I’m going to teach you how to use an options matrix so that you can make the best decisions possible.
What is an Options Matrix?
An options matrix is a spreadsheet that helps you apply various criteria across different options.
Weighting and scoring the options will help you make the best strategic decision. It’s a way for you to get out of your head and look at the options as objectively as you can.
I think it’s easiest if I just show you an example of one I’ve made recently.
Last week I dropped into three different Brazilian Jiu-Jitsu schools. They were all badass and strong in their own ways.
There wasn’t an obvious choice to be made, so I created an options matrix.
Once it was laid out on the spreadsheet, I knew that #1 was the best school for me.
How to Use a Decision Matrix
Here are the steps to follow when using a decision matrix:
- List all your Options.
- List your Criteria. These are the factors that are important.
- Decide on a “weight” for each of your Criteria. All factors aren’t equal. This is where you prioritize the factors.
- Score each option based on criteria.
- Multiply the score by the weight to come up with the total score.
- Look at the total score and make your final decision
I don’t think anyone’s coming to this blog for advice on how to pick a Brazilian Jiu-Jitsu school.
In fact, you’re probably wondering how you can apply this to affiliate marketing or business.
I’ll show you how to do that right now.
Picking Which Affiliate Campaign to Run
You’re probably overwhelmed with options.
This one blog says dropshipping is still hot.
Your affiliate manager is trying to get you to run black hat nutra.
Your gut wants to give Snapchat ads a try.
Some eBook you downloaded says Push traffic is the next big thing.
They’re all decent options. So how do you choose?
Let’s come up with a set of criteria for evaluating an affiliate campaign.
- Potential Revenue: How much money can you potentially make with this campaign?
- Costs: What kind of costs are involved with running this campaign? Some campaigns are simpler where you only need to pay for tracker, hosting, and traffic costs. If you’re running campaigns involving cloaking, then you’ll need to spend more on cloaking tools, accounts, virtual assistants, etc.
- Legal Risks: No one wants to get sued or get their earnings reversed because they were breaking the rules.
- Control: How much control do you have? If your online store gets 100% of its sales from Amazon, then you have low control. They can shut you down anytime. If you can only make sales on Facebook, but they keep banning your account, then you have low control.
- Certainty of Success: How certain are you that what you’re doing will be successful? Think about running a campaign where your affiliate manager says it’s hot and you have multiple friends running it. That’s high.
- Maintenance: Imagine that the campaign is not only up and running but also profitable. How much work is it going to take to keep the campaign going? Is it a set it and forget it campaign, or do you have to watch the bids every hour?
- Speed to Implementation: How long does it take to get the campaign up and running? Can you get this up in a few days, or is this something that’ll take a few weeks? Remember that time is money.
These are a few of the criteria that I came up with. I’m sure that you can come up with more.
Weighing the Options
Here’s something I love: everyone’s going to come up with a different number.
That’s because you’re going to weigh the criteria to your own standards.
Here’s the scale I use:
- Highly Unimportant
- Somewhat Unimportant
- Somewhat Important
- Highly Important
My criteria are going to be different from yours.
For instance, I care a lot about legal risks.
I’m not interested in running affiliate campaigns that could get me sued. I’m a bigger target than most affiliates since I live in America and I’m an influencer in this space.
A younger affiliate who operates out of China might not care as much about the legal risks.
I’ll probably weight it a 4, while the Chinese affiliate will weigh it a 1.
What about the total costs?
A bigger affiliate can absorb come of the overhead and set up costs of running a campaign. They might rate this a 3.
What if you’re a smaller affiliate with a $400 a month budget? You want as much of that budget going towards traffic as possible.
So if one campaign requires around $400 worth of tools, it’s not going to be as attractive for you at this time. You should weigh the costs at a 5.
Some of these scores will be based off of experience, while others might be educated guesses.
Here’s an example I just came up with:
Here’s a link to the spreadsheet.
Go to file -> make a copy to play around with the numbers.
Some quick thoughts:
- Timing can affect the scores. For example, Shopify dropshipping might’ve weighed higher several years ago when it was first introduced. But marketing conditions have changed.
- There are pros and cons. One option might have the highest earning potential, but it can come with high overhead costs, legal risks, and high maintenance. The decision matrix is a way to see how all the criteria interact.
- This can be as simple or as complicated as you want. I’ve had some charts that only had two options with three criteria. That was simple. I’ve also had ones that had 10 different options with 24 different sets of criteria. Don’t kill an ant with a sledgehammer. Make sure that it’s “just right.”
You Can Drown in Opportunity
“The main thing is to keep the main thing, the main thing.” – From a Scaling Up Conference I Attended.
I use to think that the hardest part of business was coming up with a good idea.
Now, I think it’s the exact opposite.
Mark Cuban said that you can drown in opportunity.
It’s tempting to try to do everything, and I’ve certainly fallen into that trap myself.
But the problem is you have limited time and limited focus.
It’s hard for you to compete if you’re spread out.
What happens if you’re dedicating 10% of your resources to one project, and you’re competing against someone who lives and breathes it?
The hardest part is making a choice and sticking to it.
I hope this option matrix tool can help you better evaluate your options.